Betting can be generally defined as an activity where a number of participants try to predict the outcome of a certain well-defined incident, such as e.g. a sports event, an election or simply the arbitrary drawing of a small group of numbers or other symbols (in the latter case the terms “lotto” or “lottery” are more commonly used than “betting”). Typically placing a bet means putting down a certain sum of money or other commodity of value, so that those who succeeded in predicting the outcome of the incident in question get their investment back with a certain profit that is financed from the collected stakes of the unsuccessful participants. An important feature of betting is that all bets must be placed before a certain time instant after which it would be possible to know the result or anticipate it with an increased level of certainty.
In a manual betting system where all bets must be placed before an officer of the organiser of the game it is easy to take care of the timing aspects of betting. The organiser which accepts the bets closes at the moment after which no more bets are accepted, and opens again for paying the profits after the outcome of the incident is known. In electronic betting arrangements the situation is somewhat more complicated.
A feature common to typical known electronic betting systems is their relative slowness in receiving bets. Large betting systems must accept even tens of millions of bets concerning a single incident. Even when very fast communications and storage technology are used, there exists a limit for the rate at which the bets can be communicated and stored into the central database. This feature has limited the applicability of the whole principle of betting so that the incidents the results of which are objects of betting are themselves rather large and long lasting, like a complete football game or a complete horse race.
A solution for above mentioned drawbacks is described for example in prior art document WO 02/27674, where electronic records that contain predictions of the outcome of a certain incident are handled within a communications system comprising a distributed domain and a central domain. Within the distributed domain there is generated, before the outcome of the incident is known, a multitude of electronic records that contain predictions of the outcome of the incident. The electronic records are conveyed from the distributed domain to the central domain. After the outcome of the incident is known, the central domain finds out which of the electronic records, if any, contain correct predictions of the outcome of the incident. Each of the electronic records is furnished, within the distributed domain, with a cryptographically protected proof of a certain moment of time associated with the generation of the electronic record. The central domain accepts only those of the electronic records conveyed thereto as valid for which the cryptographically protected proof of a certain moment of time associated with the generation of the electronic record shows that said certain moment of time was not later in time than a certain time limit.
In prior art methods the clock signal used for time-stamping bet records are generated either internally by the distributed domain or externally by another party. An exemplary prior art method is illustrated in FIG. 1, where clock signal, either internally or externally produced, is used for generating time-stamped bet records. In FIG. 1 a unidirectional algorithm is used to convert the actual contents of the bet and the clock signal into a bet record that is authenticated by encrypting it with a private key of the player placing the bet and encrypted with the public key of the organiser. As a part of the conversion a checksum is calculated and added into the bet record. The result is an authenticated, encrypted and time-stamped bet record that can only be decrypted with the private key of the organiser. The authentication based on the player's private key can only be reversed with the same player's public key.
There are, however, some drawbacks also in prior art solution mentioned above, namely, the integrity of the used clock signal. The internal clock signal may be fingered, and it is difficult to know within the central domain if the clock signal of distributed domain is fingered or not. Further, the externally produced clock signal may be stolen, caught or seized before reached on the distributed domain and re-sent a moment later to the distributed domain, for example. In addition the externally produced clock signal may be fingered, especially if its protection can be cracked.